Strategies for Nonprofits Affected by QuickBooks Tag Depreciation

QuickBooks is depreciating the tags functionality in their accounting software starting March 8. If your nonprofit has chosen to use the tagging feature in QuickBooks to help identify your restricted revenue, this means you will be juggling even more spreadsheets outside of your software.

There is a better way.

If losing tags is putting you one step closer to finding a new fund accounting software—or you are just scrambling to figure out how to track restricted revenue in QuickBooks—here are some tips for what you can do in the short term, and what you need to look for in the long-term.

The Value of Tags for Nonprofits Using QuickBooks

Many nonprofits used the tagging functionality in QuickBooks to help identify funding sources and donor intent, such as specific grants and programs. Tags allowed these organizations to recognize funds that needed to be tracked further in an outside spreadsheet. This was a workaround that allowed a nonprofit to stay compliant with donor restrictions and grant requirements, even though it was outside of their accounting solution.

Without the tagging functionality, nonprofits must now find alternative ways to manage restricted revenue, potentially adding more manual steps to an already cumbersome process. This shift underscores the need for a more robust accounting solution designed specifically for the unique needs of nonprofit organizations.

Tracking Restricted Revenue Without Tags

When your accounting software is not built for nonprofits, it forces you to manage your grants and other restricted revenue in spreadsheets, which can introduce errors and additional risk. Managing financial information across multiple programs can lead to disjointed and unreliable reporting, undermining the credibility of your financial data.

When you maintain financial data outside of your accounting solution, you introduce unnecessary risk into your financials. While Excel is a powerful tool, information can be mis-keyed and formulas can get broken. Keeping this information outside your system requires impeccable spreadsheet management and manual updates.

Here are some tips for making sure you mitigate risk until you can switch to nonprofit accounting software.

• The first thing you should do as a finance professional is audit your spreadsheets because you don’t know how adept your people, or predecessors, are at Excel. Verify formulas are working the way they should, and information matches what is in your accounting software.
• Use the trace precedent and trace dependents functionality in Excel to find where the numbers are coming from to feed the formula and where the numbers are going to throughout your spreadsheet.
• Have a documented process to make sure you are keeping your Excel spreadsheet up to date. Know who should be updating your spreadsheets and when. Use the “show changes” functionality or document history to track who has made changes and what they changed.
• Crosstrain your team so others know what information is kept in which spreadsheet and how to make sure the data is updated. Avoid being a bottleneck when your programs team need an update on how much budget is left on a specific grant.
• Do a spreadsheet audit at least once a year. Make time to review every spreadsheet you use to manage your accounting to verify the information is correct and only approved team members have access to the data.

Simplify Managing Restricted Revenue with Fund Accounting Software

Don’t wait for the last straw. You are going to continue to outgrow QuickBooks because they are not focused on your needs.

Unlike general accounting systems, nonprofit-specific solutions like Blackbaud Financial Edge NXT^® are designed to handle the complexity of restricted revenue and grant management. These systems provide centralized documentation, making it easier to keep all financial records in one place and ensuring accurate, up-to-date information.

Integrated with tools like Blackbaud Raiser’s Edge NXT®, Financial Edge NXT enhances your ability to precisely track donor intent, ensuring funds are used as intended and maintaining donor trust. This level of integration streamlines processes and saves time by reducing manual data entry and minimizing errors.

Nonprofit-specific accounting systems also come with enhanced accountability and internal control features, simplifying how you track expenditures and revenues. This ensures compliance with funder requirements and provides clear audit trails and customizable reports. This transparency makes it easier to demonstrate financial integrity to stakeholders, auditors, and regulatory bodies.

By adopting a nonprofit fund accounting solution like Financial Edge NXT, you can improve financial reporting accuracy and operational efficiency, freeing up resources to focus on your mission. The specialized software helps you navigate complex financial landscapes with confidence.

Choose a Nonprofit Accounting System that Grows with You

 If you are a growing nonprofit, QuickBooks is not made for you. It was a great tool to get you started. But now that you are growing and it’s taking multiple spreadsheets—not to mention lunchbreaks and logging in after hours—to get the information you need, it’s obvious that commercial software isn’t serving you.

If you are ready to see what true nonprofit accounting software can do for you, join us for an on-demand product tour of Financial Edge NXT.